LP are expecting more so-called zombie funds to emerge in their private equity portfolios
Limited partners (LPs) are showing signs of becoming more selective about the general partners (GPs) they deploy capital to, latest research from Coller Capital reveals.
The 44th edition of the Coller Capital Global Private Capital Barometer, published this week, surveyed 108 LPs from around the world – nearly half (44%) of which were based in Europe.
Almost a quarter (23%) of surveyed LPs expected to reduce the number of GP relationships across their private markets portfolios over the next three years, compared with 16% when Coller Capital last asked the question in 2020.
Despite this, the research found LPs remain resilient in their support of private markets with a third (33%) expecting to accelerate their rate of commitments to private markets, while 57% expect their pace to remain the same over the next two years.
Continuation vehicles
The analysis also showed that LPs have differing views on whether GPs are striking the right balance between providing liquidity and allowing portfolio companies more time for value creation.
It said that, while 40% of LPs believe GPs are generally getting the balance right, 39% say GPs are not providing liquidity early enough. A further 22% say some of the best companies are being sold too early.
Coller Capital said that, against this backdrop, so-called "continuation vehicles" appear to have become an established feature of private markets rather than a temporary response to subdued exit conditions.
It said that industry data underscored this – noting that GP-led secondary volume reached approximately $106bn (£80.6bn) in 2025, a record level achieved even as broader exit activity remained constrained.
It added that, even when traditional exit channels improve, 40% of LPs expect new continuation vehicle activity to continue increasing, while 29% expect it to remain at current levels and 31% expect it to decline.
The survey also found that secondaries volumes had increased substantially across all market types – with LPs expecting private credit secondaries to see the greatest proportional growth in the next three years.
Coller Capital said traditional private market exits and secondaries were "complementary" routes to liquidity.
Chief investment officer and managing partner Jeremy Coller said: "Recent high-profile public market moves have put the exit window back at the centre of the conversation.
"That is encouraging, but it would be wrong to see IPOs and secondaries as competing routes to liquidity. The Barometer makes it clear that they are complementary. Secondaries have become a core route to liquidity and a central part of how LPs allocate, rebalance portfolios and retain exposure to assets they continue to have conviction in. Two fifths of LPs in this Barometer expect continuation vehicle activity to keep growing even as traditional exits recover, which tells you something about how structural this shift to secondaries has become."
Zombie funds
LPs in the survey also said they expected more so-called "zombie" or "living dead funds" to emerge in their private equity portfolios. These are legacy investment vehicles prolonged past their original life cycle by managers who struggle to exit investments.
More than half (54%) of LPs expect the number of such funds in their private equity portfolios to increase over the next two years. A further 31% expect the number to remain stable, while just 15% expect a decrease.
Most LPs, however, are taking a pragmatic approach to managing the situation – with Coller Capital noting that, in no-fault situations, the preferred response is a management fee step-down, cited by 54% of respondents. Manager incentive resets, where fund economics are revised to encourage timely exits, come in second at 18%, while manager removal or replacement and taking no action are each favoured by 11% of LPs.
